In Turbulent Times You Should Make Your Asset Mix More Conservative, Right?

Estate Planning in a Digital Age
December 18, 2018
Are you prepared for the unexpected?
April 11, 2019
Show all

In Turbulent Times You Should Make Your Asset Mix More Conservative, Right?

American bullying. Chinese bullying. Trade uncertainty. Poor oil prospects. Increasing household debt. Unsustainable housing run.

There are plenty of storm clouds overhead and it’s easy to come to the conclusion that the prudent strategy is to reduce your exposure in equities and increase your reliance on fixed income investments.

But the latest research suggests otherwise. I was struck by an article in the Globe and Mail entitled: “It’s time to rethink the 60-40 portfolio asset mix” by Frederick Vettese. It restates the thinking that has ruled for the past 50 years – that as you approach retirement or face a bear market, you should reduce your equities to less than 60 percent.

Except now that strategy has been proven to be ineffective in generating the best long-term returns.

Vettese writes about rigorous computer simulations that compare returns of 60-40 and 70-30 portfolios over a 20-year period. The results are as surprising to me as they will be to you.

There was almost no downside risk to the higher 70-30 asset mix even through downturns. Take a look at his comparison chart.

Here’s his conclusion:

“Anyone who was previously comfortable with a 60-40 mix should be thinking hard about switching to a 70-30 mix. Indeed, no matter what your current equity weighting, you should be considering shifting another 10 per cent into equities.”

Here at BarecWealth we run our own algorithms to predict performance, but it’s an eye-opener to look at someone else’s calculations that point to a blind-spot for investors and investment planners alike – being more conservative rarely pays.

We never want to take our clients out of their comfort zones, but we also don’t want to see them leaving money on the table because of outdated assumptions.

Are you ready to consider changing your asset mix?

Let’s talk.

And if you have friends who might want to look at their investments in a new light, please pass this along.

Thanks as always for reading,


1370 Don Mills Road, Suite 211, Toronto, ON  M3B 3N7

This information has been prepared by Barbara & Eric Chong who are Financial advisor for Investia Financial Services Inc., and does not necessarily reflect the opinion of Investia. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Financial Advisor can open accounts only in the provinces in which they are registered. For more information about Investia, please consult the official website



Comments are closed.